News & Insights
Five Unique Ways a Business can Partner with Amazon
As one of the most successful companies in history, it’s not surprising that a long line of businesses and entrepreneurs are interested in becoming an Amazon partner. Fortunately for them, there are several ways to turn that dream into a reality. While some of these partnerships are relatively simple to begin pursuing, working with Amazon effectively for the long term is no easy task. Instead, growing a business with the help of Amazon requires extensive knowledge and a well-executed plan, regardless of which form the relationship takes. Keep reading to learn about five ways your business can get started.
1. Become an Amazon Seller
The most common Amazon partnership, of course, is via a seller relationship with the retail platform. With more than 300 million shoppers worldwide and tens of millions of products, the Amazon marketplace plays an integral role in e-commerce in the United States.
Today, brands and manufacturers have two primary ways to leverage Amazon in their quest to reach customers and increase sales. They can begin a first-party relationship (1P) with the company and sell products directly to Amazon but must be invited to do so. Under this arrangement, they pay a flat participation fee to serve as a vendor to Amazon, which then manages the storing, pricing and delivery of products. While 1P sellers lose control over product pricing, they do still have the ability to promote their products through Amazon advertising and develop A+ Content through Vendor Central.
The alternative to becoming a 1P seller is taking a more independent route. Unlike a 1P relationship which requires an invitation, any seller can instead choose to become a third-party (3P) seller. Companies opting for this route retain responsibility for managing their inventory and listings, selling directly to Amazon customers via the website. In addition, the fees for 3P sellers are much more complex and based on both the product and fulfillment methods. However, the business has complete control over pricing and all other aspects of its listings.
Each approach has pros and cons, and the most appropriate option will vary depending on the seller. For example, a 1P seller can enjoy a more hands-off approach to Amazon sales but must face the consequences of decisions beyond their control. Meanwhile, 3P sellers enjoy a more traditional e-commerce experience but may face fierce competition for Amazon’s all-important Buy Box and must dedicate much more of their time and resources to optimizing and monitoring their presence on the platform.
2. Join the Amazon Business Partner Network
Since launching in 1995, Amazon has become more than a popular way for sellers to reach individual consumers. The online giant has also entered the field of business-to-business services via its Amazon Business Partner Network.
While the services under this umbrella vary, the most familiar aspect is the eProcurement program, Amazon Business. Companies who join the partnership network receive access to a marketplace specifically for the needs of businesses. Joining is free and allows participants to access business discounts, create multi-user accounts, define approval workflows and set spending limits.
Members of the Amazon Business Partner Network can also utilize enhanced data about their company’s spending habits and receive specialized support for public sector businesses. Partner-only content, such as targeted webinars for business owners and SaaS tools, is an added benefit of joining the network, and business partners can enjoy additional savings and perks by becoming an Amazon Business Prime member.
3. Opt for Fulfillment By Amazon
One of the ways that Amazon sellers try to reach their full potential and land the coveted Buy Box is by opting to use Fulfillment by Amazon (FBA) rather than managing the process alone. Choosing to outsource order fulfillment to the online retailer puts your products inside an Amazon FBA warehouse where they can be picked, packed and shipped by an Amazon employee. Unlike a 1P relationship, the seller retains complete control over pricing and inventory management while relying on Amazon logistics for the rest.
Obviously, the decision to use Amazon’s FBA service comes with added costs. In addition to paying standard seller fees on orders, Amazon will also charge a fulfillment fee based on the type and size of the product. Storage fees for the space that inventory takes up in Amazon’s fulfillment centers are yet another cost that results from using an FBA model for sales. However, some of these costs would simply originate elsewhere, such as from in-house employees or a different logistics provider. By partnering with Amazon on fulfillment, sellers enjoy an easier path to Amazon Prime status for their products, reduced customer interactions and more streamlined processes for returns.
4. Utilize Amazon Web Services
Since 2006 Amazon has provided companies with information technology infrastructure services, known as cloud computing. Designed to reduce the technology costs that startups, large enterprises and government agencies face, Amazon Web Services (AWS) is the most comprehensive and widely-used cloud platform in the world, with more than 200 services available from data centers around the globe.
AWS focuses on offering functionality, security, innovation and agility to its customers. Their services range from backup storage and purpose-built databases to artificial intelligence, analytics and website hosting. Businesses of all sizes needing technology support are choosing to partner with AWS due to their experience in the industry and advantages for clients.
Whether they sell on Amazon or not, online retailers can partner with the company through their AWS tools. While doing so would not impact a seller’s performance in the Amazon marketplace, it could be a way to lower their IT costs and strengthen their brand’s web stability or security.
5. Sign up for the Amazon Delivery Service Partner Program
A recent addition to Amazon’s partnership options is the opportunity to own one of its independent delivery companies. More than just being a delivery driver, it’s similar to the franchise model common in the restaurant and service industries. The Delivery Service Partner (DSP) program is aimed at individuals interested in running their own full-time small business.
Applicants chosen to join the Amazon DSP program are responsible for hiring, training, developing and retaining a team of up to 100 employees while managing a fleet of between 20 and 40 delivery vans. The Amazon delivery company will exclusively support the delivery of Amazon packages within a specific town or region.
The company claims the startup costs for Amazon delivery partners are as little as $10,000 and states that logistics experience is not required. Lease agreements for delivery vehicles that avoid up-front fees are negotiated by Amazon, while training and technology to run the business are provided to selected applicants. However, it is a highly competitive process, and only limited openings as the owner of an Amazon delivery business are available. In addition, Amazondetermines the locations where a Delivery Service Partner is needed.
Those interested in becoming a DSP owner may complete an initial screening to join a waitlist called the Future DSP program to prepare for a career as a full partner and be notified when an opportunity becomes available.
Start your Amazon partnership off right
For many businesses, the key to partnering with Amazon is creating a solid foundation to build from. Since 2011, Amazon sellers have trusted Amify to help them do just that. Our team of experts knows how to navigate the platform’s extensive landscape of options to find the techniques and relationships that will lead to growth. It’s time you learned more about Amify’s proven record of managing logistics, optimization and efficiency for brands that are dominating the competition. Start the conversation today.
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